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Parth Amicus Brief, on appellant's petition for panel rehearing and rehearing en banc

No. 08-55022
________________________________________________________________
________________________________________________________________

IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

________________________________________________

LOUISE PARTH,
Plaintiff-Appellant,

v.

POMONA VALLEY HOSPITAL MEDICAL CENTER,
Defendant-Appellee.
________________________________________________________

On Appellant's Petition for
Panel Rehearing and Rehearing En Banc
________________________________________________________

BRIEF FOR THE SECRETARY OF LABOR AS AMICUS CURIAE

M. PATRICIA SMITH
Solicitor of Labor

WILLIAM C. LESSER
Acting Associate Solicitor

PAUL L. FRIEDEN
Counsel for Appellate Litigation

DEAN A. ROMHILT
Attorney

U.S. Department of Labor
Office of the Solicitor
200 Constitution Avenue, N.W.
Room N-2716
Washington, D.C. 20210
(202) 693-5550

________________________________________________________________
________________________________________________________________

TABLE OF CONTENTS

TABLE OF AUTHORITIES

INTEREST OF THE SECRETARY

ARGUMENT

REDUCTIONS IN REGULAR HOURLY WAGE RATES IN CONNECTION WITH EMPLOYEE SCHEDULE CHANGES ARE PERMISSIBLE UNDER THE FLSA, PROVIDED THAT THE REDUCTION IS NOT DESIGNED TO CIRCUMVENT THE ACT'S OVERTIME REQUIREMENTS AND THE REDUCED RATE IS "BONA FIDE"

CONCLUSION

CERTIFICATE OF COMPLIANCE

STATEMENT OF RELATED CASES

EXHIBIT A

April 27, 1988 Wage and Hour Division Opinion Letter

EXHIBIT B

April 27, 1989 Wage and Hour Division Opinion Letter 1989 WL 1632939 (Apr. 27, 1989)

EXHIBIT C

May 27, 1999 Wage and Hour Division Opinion Letter 1999 WL 1002410 (May 27, 1999)

TABLE OF AUTHORITIES

Cases:

Adams v. Dep't of Juvenile Justice of the City of New York, 143 F.3d 61 (2d Cir. 1998)

Anderson v. City of Bristol, 6 F.3d 1168 (6th Cir. 1993)

Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728 (1981)

Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697 (1945)

Christensen v. Harris County, 529 U.S. 576 (2000)

Collins v. Lobdell, 188 F.3d 1124 (9th Cir. 1999)

Conner v. Celanese, Ltd., 428 F. Supp.2d 628 (S.D. Tex. 2006)

Parth v. Pomona Valley Hosp. Med. Ctr., 584 F.3d 794 (9th Cir. 2009)

Rhodes v. Bedford County, 734 F. Supp. 280 (E.D. Tenn. 1990)

Skidmore v. Swift & Co., 323 U.S. 134 (1944)

Walling v. A.H. Belo Corp., 316 U.S. 624 (1942)

Walling v. Helmerich & Payne, Inc., 323 U.S. 37 (1944)

Walling v. Youngerman-Reynolds Hardwood Co., Inc., 325 U.S. 419 (1945)

Wethington v. City of Montgomery, 935 F.2d 222 (11th Cir. 1991)

York v. City of Wichita Falls, 48 F.3d 919 (5th Cir. 1995)

Statutes:

Equal Pay Act, 29 U.S.C. 206(d)

Fair Labor Standards Act, 29 U.S.C. 201 et seq.

29 U.S.C. 204
29 U.S.C. 206(a)
29 U.S.C. 207(a)
29 U.S.C. 207(j)
29 U.S.C. 211(a)
29 U.S.C. 216(c)
29 U.S.C. 217

Fair Labor Standards Amendments of 1985 Pub. L. 99-150, 99 Stat. 787 (Nov. 13, 1985)

Code of Federal Regulations:

29 C.F.R. 778.316
29 C.F.R. 778.500 through 503

Miscellaneous:

Fed. R. App. Proc. 29

Fed. R. App. Proc. 35

Fed. R. App. Proc. 40

Ninth Cir. R. 29-2

Ninth Cir. R. 35-1

April 27, 1988 Wage and Hour Division Opinion Letter (Exhibit A)

April 27, 1989 Wage and Hour Division Opinion Letter 1989 WL 1632939 (Apr. 27, 1989) (Exhibit B)

May 27, 1999 Wage and Hour Division Opinion Letter 1999 WL 1002410 (May 27, 1999) (Exhibit C)

No. 08-55022
________________________________________________________________
________________________________________________________________

IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

________________________________________________

LOUISE PARTH,
Plaintiff-Appellant,

v.

POMONA VALLEY HOSPITAL MEDICAL CENTER,
Defendant-Appellee.
________________________________________________________

On Appellant's Petition for
Panel Rehearing and Rehearing En Banc
________________________________________________________

BRIEF FOR THE SECRETARY OF LABOR AS AMICUS CURIAE

    Pursuant to this Court's February 23 invitation, Federal Rule of Appellate Procedure 29, and Circuit Rule 29-2, the Secretary of Labor ("Secretary") submits this brief as amicus curiae. The Department of Labor's ("Department") position is that reductions in regular hourly wage rates in connection with employee schedule changes are permissible under the Fair Labor Standards Act ("FLSA" or "Act"), provided that the reduction is not designed to circumvent the Act's overtime requirements and the reduced rate is "bona fide."

INTEREST OF THE SECRETARY

    The Secretary has a strong interest in the interpretation of the FLSA because she administers and enforces the Act. See 29 U.S.C. 204, 211(a), 216(c), 217. The Department's Wage and Hour Division has issued opinion letters addressing the permissibility under the Act of rate reductions of the type at issue in this appeal, and the Secretary has a strong interest in ensuring that the opinion letters are accorded appropriate deference.

ARGUMENT

REDUCTIONS IN REGULAR HOURLY WAGE RATES IN CONNECTION WITH EMPLOYEE SCHEDULE CHANGES ARE PERMISSIBLE UNDER THE FLSA, PROVIDED THAT THE REDUCTION IS NOT DESIGNED TO CIRCUMVENT THE ACT'S OVERTIME REQUIREMENTS AND THE REDUCED RATE IS "BONA FIDE"

    The FLSA does not prohibit reductions in regular hourly wage rates in connection with employee schedule changes; however, the reduction must not be designed to circumvent the Act's overtime requirements, and the reduced rate must be "bona fide." This long-held position has been set forth in the Department's opinion letters, is consistent with caselaw, and is entitled to deference.

  1. Rate Reductions May Not Be Designed to Circumvent the Act's Overtime Requirements

    The FLSA requires that non-exempt employees be paid overtime pay at a rate at least equal to one and one-half times their regular rate for each overtime hour worked. See 29 U.S.C. 207(a). The Supreme Court has held that the regular rate cannot be an artificial rate designated by the employer, but instead is the hourly rate actually paid to the employee. See Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424 (1945) ("[R]egular rate refers to the hourly rate actually paid the employee for the normal, non-overtime workweek."); Walling v. Helmerich & Payne, Inc., 323 U.S. 37, 40 (1944) ("regular rate" means "the hourly rate actually paid for the normal, non-overtime workweek").

    These Supreme Court cases invalidated pay plans that used artificial regular rates that were not based on the actual amounts paid to employees in order to avoid or underpay overtime due. In Helmerich & Payne, the workday's first four hours were paid at a "regular" rate designated by the employer, the second four hours were paid at an "overtime" rate equal to one and one-half times the designated "regular" rate, and no overtime premium was paid for overtime hours worked (instead, employees were paid at the designated "regular" or "overtime" rate for overtime hours). See 323 U.S. at 38-39. The Supreme Court concluded that the designated pay rates were "fictitious" and "illusory," and that the employer should have used the hourly rate the employee actually received for non-overtime hours (an average of the designated regular and overtime rates) and then multiplied that actual rate received by one and one-half to determine the correct overtime rate. Id. at 41-42. In Youngerman-Reynolds, the employer designated a regular rate and an overtime rate, but actually paid its employees at a piece rate that was higher than both of the designated rates. See 325 U.S. at 422-23. The Supreme Court concluded that the designated regular and overtime rates were "artificial" and "never actually paid," and that the FLSA required conversion of the piece rate actually paid to an hourly rate that would be used as the regular rate for calculating overtime due. Id. at 424-26.

    The Department has incorporated Helmerich & Payne and Youngerman-Reynolds into its regulations and has described more broadly the types of pay schemes that are not permitted because they circumvent the Act's overtime requirements. See 29 C.F.R. 778.316, 778.500 through 778.503. The regulations provide that employers cannot avoid overtime by, for example: setting an artificially low hourly rate upon which overtime pay is based; decreasing the hourly rate as the number of hours worked during the week increases; setting the employee's hourly rate for work during overtime hours lower than the hourly rate for identical work during non-overtime hours; providing that the hourly rate for the same type of work is lower during weeks when overtime is worked than during non-overtime weeks; agreeing with the employee that hours worked over 40 in a week do not count as hours worked; or paying employees the same total sum, comprising payment for both non-overtime and overtime hours each week, without regard to the number of overtime hours worked in any week. See id.

    The pay plan implemented by Appellee Pomona Valley Hospital Medical Center ("Hospital") for the 12-hour shift nurses who previously worked an 8-hour shift schedule does not appear to fall into any of the categories identified above. [1] The hourly rate paid by the Hospital to its 12-hour shift nurses for regularly scheduled hours does not seem artificially low and is not reduced as the nurses work more hours or reach overtime hours (in fact, it is increased to the 8-hour rate when those 12-hour shift nurses work shifts beyond their regular shifts). See Parth v. Pomona Valley Hosp. Med. Ctr., 584 F.3d 794, 796-97 (9th Cir. 2009); District Court's Order Granting Motion for Summary Judgment (ER Tab 76), 10. Most significantly, the 12-hour shift nurses are paid overtime when it is due them, and their overtime pay is calculated based on a regular rate that reflects the actual hourly rate paid to them. See Parth, 584 F.3d at 787.

    Moreover, contrary to the assertion by Appellant Louise Parth, the Hospital's pay plan does not "make overtime payments cost neutral." Petition for Rehearing, 2. As the panel noted, Parth's characterization of the Hospital's pay plan is a reference to the Hospital's desire to implement the change to 12-hour shifts without increasing its overall wage costs. See Parth, 584 F.3d at 796-98. Overtime pay due, however, is not neutralized or avoided, but is paid to the nurses when due under the FLSA and is calculated based on the actual hourly rate paid to them. See id. at 797. Of course, it is true that Parth would have received overtime pay at a higher rate and earned more per hour under the 12-hour shift work schedule had the Hospital not reduced her regular hourly rate, but such reductions are permissible provided they are not designed to circumvent the Act's overtime requirements and are "bona fide" (see infra). And, Parth is correct that the Hospital was not required to reduce the regular hourly rate of nurses who opted for 12-hour shifts (see Petition for Rehearing, 1 & 7-8); the Hospital could have maintained the same hourly rate and absorbed the greater wage costs resulting from the change to 12-hour shifts. However, the issue is not whether the Hospital was required to reduce the regular hourly rate of the 12-hour shift nurses, but whether it was permitted to do so under the FLSA.

  1. Reduced Rate Must Be "Bona Fide"

    In addition to not being designed to circumvent the Act's overtime requirements, the reduced rate must be "bona fide." A reduced rate would be "bona fide" if it is: (1) agreed to by the employee; (2) in place for a substantial period of time; and (3) equal to or in excess of the Act's minimum wage. See April 27, 1988 Opinion Letter (copy attached as Exhibit A). These factors appear to be met in the present case. First, the rate reduction was agreed to by Parth and other 12-hour shift nurses in individual agreements, and was later included in their collective bargaining agreement ("CBA"). See Parth, 584 F.3d at 796-97. [2] Second, the rate reduction for 12-hour shift nurses has been in place at the Hospital since 1989 or 1990 and has applied to Parth since 1993. See id. Third, the reduced regular hourly rate paid to 12-hour shift nurses -- between $34.64 and $46.92 in the 2004 CBA depending on which shift was worked (see id. at 797) -- clearly exceeds even the current minimum wage of $7.25. See 29 U.S.C. 206(a).

    The fact that the rate reduction in the present case results in payment to the 12-hour shift nurses at a lower hourly rate than the 8-hour shift nurses for performing the same work (albeit on different shifts) does not violate the FLSA. The FLSA does not prohibit employers from paying different rates to employees who perform the same job. [3] Moreover, 29 C.F.R. 778.316, which provides that pay rates for particular work may not be lowered because the work is performed during overtime hours or during weeks when overtime is worked, cannot be read to prohibit rate reductions that apply generally to all hours and weeks worked by an employee without regard to whether overtime is worked. As the Supreme Court noted, employers and employees are generally free to establish their pay rates as long as minimum wages and overtime are paid when due. See Youngerman-Reynolds, 325 U.S. at 424.

  1. The Department's Position Is Long-Standing, as Set Forth in its Opinion Letters

    The Department has previously set forth this position in several opinion letters issued by the Wage and Hour Division. In its April 27, 1988 Opinion Letter, the Department responded to an employer whose employees requested a change from 8-hour shifts to 12-hour shifts. The employer proposed to reduce the employees' hourly rates so that the employees would receive "virtually identical compensation" (including the new overtime pay) for the same number of hours worked under the 12-hour shift schedule as the 8-hour shift schedule. Apr. 27, 1988 Opinion Letter. The Department responded that, as a general matter, setting pay rates above the minimum wage "is a matter for agreement between the employer and the employees or their authorized representatives." Id. It stated that "there is no provision in FLSA which prohibits an employer from reducing an employee's rate of pay if such reduction is bona fide and is not designed to circumvent the overtime requirements of FLSA." Id. According to the Department, as set out supra, such reduced rates would be bona fide if they: (1) are agreed to by the employee; (2) operate for a substantial period of time; and (3) equal or exceed the FLSA's minimum wage. See id. The Department concluded that the proposed pay plan appeared to meet those factors. See id.

    In an April 27, 1989 Opinion Letter, the Department provided a nearly identical response to a state/local government employer whose employees requested that their 8-hour shifts and 40-hour workweek be changed to 12-hour shifts and alternating 36-hour and 48-hour workweeks. See 1989 WL 1632939 (copy attached as Exhibit B). Because the 48-hour workweeks would trigger overtime, the employer proposed a reduction in hourly rates which, together with the new overtime pay, would maintain the level of wage payments and not increase costs. See id. The Department responded that the proposed rate reduction would "comply with FLSA provided that the reduced rates constitute bona fide hourly rates" and were not designed to circumvent overtime requirements. Id. It identified the same three factors for ensuring that such a reduced rate is bona fide (employee agreement, reduction is long-term, and reduced rate meets or exceeds minimum wage). See id. [4]

    The Department reiterated this position in a May 27, 1999 Opinion Letter. See 1999 WL 1002410 (copy attached as Exhibit C). The employer proposed, as an alternative to five 8-hour shifts per week, a schedule of rotating 12-hour shifts that would result in some regularly scheduled 36-hour weeks and 44-hour weeks (44-hour weeks would result in overtime due for four regularly scheduled hours). See May 27, 1999 Opinion Letter. The employer proposed to pay the 12-hour shift employees a lower regular hourly rate than the 8-hour shift employees so that their regular earnings (including the new overtime pay for regularly scheduled hours) would remain the same for the same number of regularly scheduled hours. See id. The Department emphasized that "there is no provision in the FLSA which prohibits an employer from reducing an employee's rate of pay if such reduction is bona fide and is not designed to circumvent the overtime requirement of the FLSA." Id. The Department again identified the same three factors for ensuring that such a reduced rate is bona fide, and concluded that the proposed rate reduction would comply with the FLSA. See id.

  1. The Department's Position Is Entitled to Deference

    The Department's position, as set forth in the opinion letters, should be accorded deference. See Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944) (Department's interpretations and opinions entitled to respect; weight of respect depends upon such factors as thoroughness of consideration and consistency of opinions); see also Christensen v. Harris County, 529 U.S. 576, 587 (2000) (Department's statutory interpretations in opinion letters are entitled to respect under Skidmore to the extent they have power to persuade). The Department's position is longstanding, as the consistent opinion letters demonstrate. Moreover, the Department's position reflects a reasoned consideration of the issue in that it acknowledges the ability of employers and employees generally to agree to their own pay rates above the minimum wage, incorporates the Department's concerns that regular rate reductions not be used to avoid overtime requirements, and identifies factors for a permissible, bona fide rate reduction.

  1. The Department's Position Is Consistent with Caselaw

    The Department's position is consistent with the pertinent caselaw. The district court's decision in Conner v. Celanese, Ltd., 428 F. Supp.2d 628 (S.D. Tex. 2006), is the only federal court decision (other than the district court's and the panel's decisions in this case) to address whether an employer already covered by the FLSA may reduce its employees' regular rates in connection with a schedule change, so that its wage costs after the change are the same as they were prior to that change. In Conner, the employees sought 12-hour shifts in addition to 8-hour shifts, and the employer, who paid overtime for hours worked over eight in a day despite not being required to by the FLSA, reduced the regular rate paid to 12-hour shift employees so that the effect of the schedule change on its wage costs was "neutral." 428 F. Supp.2d at 631-32. The district court in Conner concluded that reducing employees' regular rates when changing to 12-hour shifts, so that the employees' total pay remained the same after the change as it was before, did not violate the FLSA. See id. at 636-37. The court in Conner rejected employees' claims that their regular rate for calculating overtime due was the 8-hour rate and not the lower 12-hour rate (they were paid overtime using the 12-hour rate as the regular rate). See id. at 637. Citing Helmerich & Payne and Youngerman-Reynolds, the court concluded that the regular rate is the hourly rate actually paid to the employees and that the employer therefore was correct in using the 12-hour rate it actually paid them to calculate their overtime pay. See id.

    In addition, federal appellate courts have held that rate reductions by state and local government employers in anticipation of application of the FLSA's overtime provisions to their employees (and made to ensure that total wages paid after FLSA coverage were the same as before) were permissible under the Act. [5] In York v. City of Wichita Falls, 48 F.3d 919, 920-22 (5th Cir. 1995), the Fifth Circuit concluded that the employer's reduction of its employees' hourly rate, so that their regular earnings (including overtime pay) remained the same, did not violate the anti-retaliation provision in Section 8 of the 1985 FLSA Amendments and did not violate the FLSA because the Act did not apply to the employer at the time. Of more relevance, however, the employer's continued use of the reduced regular rate once the FLSA became applicable was deemed permissible given that the employer paid its employees the required overtime premium for each hour worked based on the actual rate paid to them. See id. at 922-23. In Anderson v. City of Bristol, 6 F.3d 1168, 1169-73 (6th Cir. 1993), the Sixth Circuit held that the employer's reduction of its employees' hourly rate, so that it still maintained the same compensation for its employees after the FLSA's overtime requirement become applicable to it, did not violate the anti-retaliation provision in Section 8 of the 1985 FLSA Amendments because the rate reduction occurred before enactment of Section 8. Further, the FLSA "does not prohibit changes in wage rates," and there was no overtime violation because the employees were paid overtime for overtime hours worked. Id. at 1173-74.

    In Wethington v. City of Montgomery, 935 F.2d 222, 225-28 (11th Cir. 1991), the Eleventh Circuit held that the employer's "budget-neutral" conversion of employees from salaried to hourly, which resulted in the same pay for the same number of hours worked although at a reduced hourly rate, did not violate the FLSA because the reduction occurred prior to application of the FLSA's overtime provisions to the employer. Significantly, the court further stated: "Nothing in the Act prohibits such a reduction. Indeed, the Supreme Court has held that schemes designed to maintain the same wage after the Act's effective date cannot be invalid solely because they seek such consistency." Id. at 228 (citing Walling v. A.H. Belo Corp., 316 U.S. 624 (1942)). The employer's continued use of the reduced hourly rate did not violate the FLSA because employees were paid for overtime worked and overtime was calculated using a regular rate reflecting the actual rate of pay. See id. at 227; see also Adams v. Dep't of Juvenile Justice of the City of New York, 143 F.3d 61, 67 (2nd Cir. 1998) ("nothing in the FLSA prevents an employer from contracting with its employees to pay them the same total wages received prior to FLSA applicability, so long as the regular rate equals or exceeds the minimum wage" and is "not a sham"). These cases' discussions of Section 8 of the 1985 FLSA Amendments and the rate reductions' timing are not directly pertinent; however, each of these cases also concluded that it was permissible under the FLSA to continue to use the reduced rate as the regular rate for calculating overtime. This conclusion is relevant to the analysis of the present case. [6]

    Finally, the Supreme Court decisions from the 1940s addressing regular rates in the context of employers' compliance with the then-recently enacted FLSA also support the Department's position. Belo is the most analogous, as the employer sought to achieve "as far as possible the payment of the same total weekly wage after the Act as before." 316 U.S. at 630. The Supreme Court concluded that "nothing in the Act bars an employer from contracting with his employees to pay them the same wages that they received previously, so long as the new rate equals or exceeds the minimum required by the Act." Id. In Youngerman-Reynolds and Helmerich & Payne, the regular rates established by the employers were rejected as artificial and improper for calculating overtime due because they did not reflect what the employees were actually paid. See Youngerman-Reynolds, 325 U.S. at 425-26; Helmerich & Payne, 323 U.S. at 41-42. Significantly, the Supreme Court recognized in both of these cases that the FLSA does not prohibit, subject to certain conditions, employers and employees from establishing bona fide regular pay rates above the minimum wage. See Youngerman-Reynolds, 325 U.S. at 424; Helmerich & Payne, 323 U.S. at 42.

CONCLUSION

    The Hospital's reduction of the nurses' regular hourly wage rates does not appear to be designed to circumvent the Act's overtime requirements and appears to meet three factors identified by the Department for ensuring that reduced rates are bona fide. Furthermore, the panel's decision does not conflict with a decision of the Supreme Court or a decision of this Court. Therefore, neither panel rehearing nor rehearing en banc is warranted. See Fed. R. App. Proc. 35 and 40; Cir. R. 35-1.

Respectfully submitted,

M. PATRICIA SMITH
Solicitor of Labor

WILLIAM C. LESSER
Acting Associate Solicitor

PAUL L. FRIEDEN
Counsel for Appellate Litigation

___signed__________
DEAN A. ROMHILT
Attorney
U.S. Department of Labor
Office of the Solicitor
200 Constitution Avenue, N.W.
Room N-2716
Washington, D.C. 20210
(202) 693-5550

CERTIFICATE OF COMPLIANCE

    Pursuant to Federal Rules of Appellate Procedure 29(c)(5) and 32(a)(7)(C), I certify that the foregoing Brief for the Secretary of Labor as Amicus Curiae:

  1. was prepared in a monospaced typeface using Microsoft Office Word 2003 utilizing Courier New 12-point font containing no more than 10.5 characters per inch, and

  2. complies with the type-volume limitation of Circuit Rule 29-2(c)(2) because it contains 4,176 words, excluding the parts of the Brief exempted by Federal Rule of Appellate Procedure 32(a)(7)(B)(iii).

Date: June 23, 2010

___signed__________
DEAN A. ROMHILT
Attorney

STATEMENT OF RELATED CASES

    Pursuant to Circuit Rule 28-2.6, the Secretary of Labor states that there are no known related cases pending in this Court.


Footnotes

[1]    The nurses at the Hospital were subject to an "8/80" pay plan, which allows a hospital and its nurses to agree that the nurses will receive overtime pay when they work more than eight hours in a day or more than 80 hours in a two-week period (instead of on the usual 40-hour per week basis). See 29 U.S.C. 207(j). Accordingly, the change from 8-hour shifts to 12-hour shifts required the Hospital to pay its nurses at one and one-half times their regular hourly rate for the last four hours of each 12-hour shift.

[2]    In evaluating the Hospital's pay plan, the panel repeatedly referred to Parth's and other nurses' agreement to the lower hourly rate and its inclusion in the CBA. See, e.g., Parth, 584 F.3d at 796-97 (Parth voted for 12-hour shifts, "entered into a voluntary agreement" with the Hospital reducing her regular rate when she changed to 12-hour shifts, was a member of the union's bargaining committee that negotiated the CBA, and was a signatory to the CBA); id. at 798 (12-hour shifts were "initiated at the nurses' request" and "memorialized in [the CBA] as a result of negotiations between [the nurses' union] and [the hospital] (again initiated at the nurses' request)"). Although an employee's agreement to the reduced regular rate is a factor in showing that the reduced rate is bona fide, an employee may not by agreement waive FLSA rights and convert a pay plan that is unlawful under the FLSA into a lawful pay plan. See Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 740-41 (1981) (right to overtime under FLSA is "non-waivable," "cannot be abridged by contract", and trumps contrary provisions in collective bargaining agreement); Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 704-07 (1945) (employees may not waive right to compensation under FLSA); Collins v. Lobdell, 188 F.3d 1124, 1127-28 (9th Cir. 1999) (FLSA rights are guaranteed to individual workers and may not be waived through collective bargaining).

[3]    However, the Equal Pay Act, 29 U.S.C. 206(d), added to the FLSA in 1963, does prohibit employers from paying employees who perform substantially the same job at different rates because of their sex.

[4]    In the April 27, 1989 Opinion Letter, the Department also addressed whether the rate reduction violated the anti-retaliation provision in the Fair Labor Standards Amendments of 1985 ("1985 FLSA Amendments"). The 1985 FLSA Amendments provided that state and local government employees became subject to the FLSA's overtime provisions effective in 1986 (see Public Law 99-150, 99 Stat. 787 (Nov. 13, 1985)), and the anti-retaliation provision in Section 8 of the 1985 FLSA Amendments provided that, for a specified period of time as state and local governments came into compliance with the FLSA's overtime provisions, they could not retaliate against their employees who asserted overtime coverage. See id., 99 Stat. at 791. The Department's position was that a unilateral reduction in pay by a state or local government employer to avoid the impending overtime requirements violated this anti-retaliation provision and was therefore prohibited. The Department concluded in the April 27, 1989 Opinion Letter that the rate reduction in connection with the change to 12-hour shifts would not violate the anti-retaliation provision. See Apr. 27, 1989 Opinion Letter. In any event, this prohibition against rate reductions applied only to state and local government employers (the Hospital is not such an employer), and it applied only through August 1, 1986. See Pub. L. 99-150, 99 Stat. at 791.

[5]    Although addressed by the panel in its decision and by the parties in their briefs, these cases are not entirely on point because the impetus for the rate reductions was not an employee schedule change during a period when the FLSA was already applicable. Moreover, these cases addressed the permissibility of the rate reductions in light of Section 8 of the 1985 FLSA Amendments, the temporary anti-retaliation provision available only to state and local government employees, which the Department interpreted to prohibit a unilateral reduction in pay by a state or local government employer made to avoid the impending overtime requirements. As explained in footnote 4, supra, the prohibition on rate reductions in Section 8 of the 1985 FLSA Amendments is not applicable here.

[6]    The district court's decision in Rhodes v. Bedford County, 734 F. Supp. 280 (E.D. Tenn. 1990), is distinguishable and unpersuasive. In that case, the court held that a rate reduction similar to those by the employers in the circuit courts of appeals cases addressed above, but after the FLSA's application to state and local government employees, violated the Act's overtime requirements. See 734 F. Supp. at 292. It summarily concluded that the employer artificially altered the employees' regular rate to avoid overtime obligations. See id. Unlike here, however, that case involved a local government employer and did not involve an employee schedule change. Moreover, the court's reasoning is cursory and is not consistent with the Department's long-held position or the weight of the caselaw.